A Ferrari hailed as the "holy grail" of classic cars has smashed the world auction record for a car by selling for a whopping £37million.

The 1962 Ferrari 250 GTO was auctioned by RM Sotheby's on behalf of Dr Greg Whitten, an avid collector car enthusiast and former chief software architect at Microsoft.

Just 36 of the 174mph models were built by the Italian manufacturer and they have become the most sought-after classic cars on the market.

Auctioneer Maarten ten Holder opened the bidding at the unprecedented level of $35 million - and three mega-rich collectors bidding via telephone battled it out to get their hands on the legendary motor.

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After a 10-minute battle, the Ferrari was sold to an unnamed buyer for $48,405,000 (£37m) - smashing the previous auction record by an incredible $10million (£7.75m).

Dr. Whitten said: "My journey with the 250 GTO has come to an end, but I am excited to see how this fantastic car is enjoyed by the new owner.

"They will have seen the seemingly unbelievable list of superlatives that are used to describe it - legendary, historic, holy grail - but I can assure them that once they get behind the wheel, they will understand that every one of them is true."

The £37million paid is more than 10 times the asking price 25 years ago.

It smashed the current record for the most expensive car sold at auction, which previously stood at £22.8million ($38m) for another Ferrari 250 GTO sold by Bonhams in 2014.

The Ferrari was the star lot being sold as part of Monterey Car Week in California, USA.

Hagarty, the car insurance firm, said 841 cars were sold across the board for a combined $367million (£284 million).

The Ferrari 250 GTO is adored by collectors because it combines beautiful looks with brilliant ability on the racing track.

A classic design both inside and out (Image: Sotheby's)

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And this 1962 model, known as Chassis 3413 GT and the third built, had a stellar racing career - winning the 1962 Italian National GT Championship with victories in nine out of ten races and twice winning the Targa Florio.

Under the bonnet of the road-legal race car is a 3-litre V12 engine which gives it a 0-60mph time of 6.1 seconds and a top speed of more than 174mph.

Ferrari rebodied it as a Series 2 car in 1964 and it has been owned by a number of wealthy Brits including Lord Anthony Bamford, of JCB fame, and Sir Lindsay Owen-Jones, former boss of L'Oreal.

Chassis 3413 GT competed 20 times in period and was never involved in an accident and never retired from a race.

This is a rare feat for any race car and the model retains its original engine and gearbox along with the factory-fitted Series II body which was fitted in 1964.

The Ferrari went under the hammer at Sotheby's (Image: Sotheby's)

It was in the hands of Italian gentleman racer Edoardo Lualdi-Gabardi that it won the 1962 Italian GT Championship with victory in nine out of ten races.

Mr. Lualdi-Gabardi received a second GTO in 1963 and sold chassis 3413 GT to then race car driver Gianni Bulgari, who went on to lead the Bulgari jewellery company from the 1960s to the 1980s.

Under both Bulgari and subsequent owner Corrado Ferlaino's ownership, the GTO won its class in the 1963 and 1964 Targa Florio.

Following its racing career, the GTO has passed through an unbroken chain of ownership that includes some of the most prominent Ferrari collectors.